A change at the top for Boeing; Gazprom Leasing; and Labrador ABS rated

By victoria@aviationnews-online.com
November 23, 2016 15:05

Boeing finally put an end to the rumours that have engulfed Seattle for the past few months with the news that Ray Conner is to be replaced as president and head of commercial airplanes with Kevin McAllister, an ex-GE man (see Americas People News below).

There is the sense that this change is the forerunner to a change of tack for Boeing’s product strategy. Some say that the MAX may be abandoned and the US airframe manufacturer should adopt an entirely new single aisle strategy. Putting in place a new head now with ensure the launch of any new strategy has a solid leader to see it through to fruition. Adopting a new strategy would not be the best time for Boeing from a capital expenditure perspective, however. To build strong cash flow to support a new product development project, Boeing needs to increase production rates on the its commodity product, the 737, but it has to keep levels steady on the 777s and 787s, which drains resources. Time will tell whether McAllister will take up the mantle but there has certainly been no indication that Boeing is changing strategy, just yet. If it did, it would have to contend with a lot of unhappy lessor customers that have invested in the Max. Boeing has announced a new customer for the Max today from Fiji Airlines but this again is only a letter of intent perhaps in light of the persisting rumours.

Pratt & Whitney, which has been spending a lot of time courting Boeing, may also be dismayed by the choice of new head from rival GE.

Also today, GE is preparing to launch another asset backed securitisation, Labrador, which has been rated by Kroll Bond Rating Agency. The $709.0 million transaction is split into two tranches: $603.0 million A notes, with an initial loan-to-value ratio of 65.0%, rated A by Kroll; and $106.0 million B notes, with an LTV of 76.4%, rated BBB. The notes will be issued by Labrador Aviation Finance Limited (Labrador Ireland) and Labrador Aviation Finance USA (Labrador USA). GE Capital Aviation Services Limited will act as the servicer for the transaction.

The notes are secured on a portfolio of 20 aircraft on lease to 16 airlines located in 15 countries. The portfolio has an initial value of approximately $928.0 million.

Mizuho is the sole structuring agent and sole bookrunner. Natixis is the liquidity facility provider. Phoenix American Financial Services is the managing agent, with Wells Fargo as the trustee.

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